Suddenly raising the debt ceiling just became a whole lot less important: China sells almost all of its U.S. Treasury Bills

By that I mean, raising the debt ceiling becomes a lot less important when no one will loan you money. And China ditching our debt simply means that fewer and fewer investors are willing to front the spending-addicted Obama administration any dough.

China has dropped 97 percent of its holdings in U.S. Treasury bills, decreasing its ownership of the short-term U.S. government securities from a peak of $210.4 billion in May 2009 to $5.69 billion in March 2011, the most recent month reported by the U.S. Treasury.

Treasury bills are securities that mature in one year or less that are sold by the U.S. Treasury Department to fund the nation’s debt... Until October, the Chinese were generally making up for their decreasing holdings in Treasury bills by increasing their holdings of longer-term U.S. Treasury securities. Thus, until October, China’s overall holdings of U.S. debt continued to increase.

Since October, however, China has also started to divest from longer-term U.S. Treasury securities. Thus, as reported by the Treasury Department, China’s ownership of the U.S. national debt has decreased in each of the last five months on record, including November, December, January, February and March.

The hysteria generated by TurboTax Tim Geithner and the Democrats in Congress -- translating roughly to 'if you don't raise the debt ceiling, the four horsemen of the apocalypse will take a collective dump on the world economy' -- is utter bunk.

While it is true Congress has never before refused to raise the debt ceiling, it has frequently taken its sweet time to do so. In 1985, Congress waited nearly three months after the debt limit was reached before authorizing a permanent increase. In 1995, 4 1/2 months passed between hitting the ceiling and congressional action. And in 2002, Congress delayed raising the debt ceiling for three months. In each case, the U.S. and the economy survived.

... The people running this government are never going to deal with this untenable situation unless and until it becomes untenable for them. The only way that will happen is if Congress refuses to raise the debt ceiling and forces the administration to prioritize payment of those obligations that must be paid to maintain our full faith and credit — for as Kevin and Veronique point out, this already perilous situation could be blown sky high if the interest rate we must pay to borrow spikes. Only when there is no way around it will we get serious consideration of what government should and should not do, and what kind of welfare state the public is willing to pay for.

If we put it off, if we expand the credit card of a bankrupt Washington whose credit card needs to be cut to pieces right now, not only will our dire straits get worse. We won’t get to deal with them — we will be at the mercy of how they deal with us when the music finally stops.

It turns out that 150 prominent economists back the GOP on the debt ceiling fight.

More than 150 economists back U.S. House of Representatives Speaker John Boehner's call to match any increase in the debt limit with spending cuts of equal size, according to a letter released by the Republican leader's office Wednesday... Signatories include Nobel laureate Robert Mundell of Columbia University and economists from schools like New York University and Georgetown University, as well as conservative think tanks like the American Enterprise Institute... Republicans say they will not back any increase that does not include steep spending cuts and other limits to ensure that debt stays at a manageable level.

Hey, Speaker Boehner: it's a real simple message. Try writing it on your palm, if you need to, for the Sunday talk shows.

President Obama better start slashing the federal government right this instant if he wants to avoid a downgrade or a default. He's grown the federal government by a phenomenal percentage in only two-and-a-half-years. And now it's time to balance the books.

Don't you dare raise the debt ceiling, Mr. Speaker. Period. Let Obama figure out where to start slashing this immense, unconstitutional federal leviathan. A default or a downgrade will be on Obama's head alone.


Hat tip: TrendingRight.com